Consider Interactive Brokers Group (IBKR) After Their Earnings Report
Interactive Brokers Group stock rallied to all-time highs shortly after their earnings report which was released earlier this month. Analysts at Zack’s believe there is further upside and have recently published an article indicating Why Interactive Brokers Group Stock Might be a Great Pick. Another article published on Motley Fool breaks down why Interactive Brokers is “building a sustainably profitable business heading into 2018.”
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Technicals
From a technical perspective, IBKR has taken out the 2017 high which was set in December at $62.33. The level is now seen as strong downside support as it confluences with the lower line of a rising trend channel that originates from a low in November as well as the 20-period daily moving average.
*source Tradingview.com
If you agree there's further upside ahead for Interactive Brokers, consider this trade which is a bet that the stock will continue to advance, at least a little, over the next seven weeks.
Buy To Open IBKR 16Mar18 60 Puts (IBKR180316P60)
Sell To Open IBKR 16Mar18 65 Puts (IBKR180316P65) for a credit of $1.83 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when IBKR was trading near $65. Unless the stock rallies quickly from here, you should be able to get close to this amount.
If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee). Each contract would then yield $181 and your broker would charge a $500 maintenance fee, making your investment $319 ($500 – $181). If IBKR closes at any price above $65 on March 18, both options would expire worthless, and your return on the spread would be 57% (450% annualized).
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Changes to Investor’s Business Daily (IBD) Top 50 This Week:
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
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Any questions? I would love to hear from you by email (terry@terrystips.com), or if you would like to talk to our guy Seth, give him a jingle at 800-803-4595 and either ask him your question(s) or give him your thoughts. seth@terrystips.com
You can see every trade made in the actual option portfolios conducted at Terry’s Tips and learn all about the wonderful world of options by subscribing here. Why wait any longer to make this important investment in yourself? I look forward to having you on board, and to prospering with you.
Terry
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